| August 21, 2002
FDIC
Attention: Section 326 Bank Rule Comments
To Whom It May Concern:
Union Bank & Trust Company is a one billion dollar financial
institution with 26 branches within the state of Nebraska. Below we list
our comments for consideration regarding the US Patriot Act.
Currently on consumer accounts, (as well as business accounts) our
current identification requirements consist of requiring a government
issued photo ID on at least one of the signatories. We record the
information from the ID, but do not retain a copy. In addition, it is
the practices of the bank to conduct a chexsystems inquiry on every new
account where the customer does not previously have a financial
relationship with the bank. We also conduct these chexsystem inquiries
when new owner/signer's are added to existing accounts. Our package with
Chexsystems included new account, OFAC, and fraudfinder inquiries.
Union Bank does on occasion cash checks for non-customers. In these
situations, a government issued photo ID as well as a thumbprint would
be required.
TimeLine
The language of the USA Patriot Act indicates these regulations are
to be effective October 25, 2002. However, this proposal was not
published until July 23 and the comment period does not end until
September 6. Even if the agencies spend very little time reviewing and
discussing the comments received, the best case scenario is that final
regulations will be issued very close to their effective date.
We Suggest:
Immediately after this comment period ends, announce that
compliance with the final regulations will not be mandatory until 120
days after their publication in the Federal Register.
Language & Criteria:
The conclusion reached in the proposal, that the new requirements
have a minimal effect on institutions, is obviously not true in our
case. The regulations will greatly increase the amount of identification
we must obtain. It will be necessary for us to write procedures;
determine how the information can be stored, but still be available to
all of our offices and draft amendments to our existing BSA policy for
the board to approve at a regularly scheduled meeting. We cannot
complete any of those tasks until we see the final regulation.
We Suggest:
That specific objective criteria be established in the final
regulations for the content and timing of the required notice to
customers, including model language deemed to be in compliance with the
regulation. By having all financial institutions held to the same
specific guidelines would help with customer acceptance.
That clarification be made for identification requirements when a
customer is not present.
That the rule not require recordkeeping for situations where an
individual does not actually receive bank services.
That the rules not include verification all new signatories on an
account, as there will be cases where multiple signatories to an account
could be number in the hundreds. Verification would be extremely costly-
rather that verification of multiple party's would be risk-based,
reasonable and practical.
That requirements of taking copies of Identification used at account
opening is not required. Recording the ID information of Type, State of
Issuance and Expiration Date should be sufficient. Rather that the
application form, with a notation of information received, be considered
compliant with the rule.
That a two-year record retention period after an account be
acceptable as it would be consistent with other recordkeeping
requirements.
A number of regulations require banks to post public notices on their
premises. Generally, those requirements are very specific and compliance
can be evaluated objectively. While the proposal's flexibility is
intended benefit the banks, its lack of an objective standard introduces
a probability that individual examiners would feel comfortable imposing
their personal opinion as to a notice's adequacy. Oral disclosure would
be the worst choice for the bank as it would be impossible to verify
compliance, the wording of the "disclosure" would vary greatly
between employees and it is the method most likely to generate a series
of follow-up questions by the customer. A timing/placement requirement
might be: "The notice is to be posted where it would be likely be
seen by a customer prior to opening or requesting a change to an
account."
There will be customer resistance to the identification requirements.
The more consistently they are communicated to the public and the more
obvious it is that they are required by law, the more readily they will
be accepted as a routine part of opening a bank account.
Also, no purpose is served by leaving the specific wording of the
notice to individual institutions, but it should be permissible for them
to add additional information to any model language that might be
provided.
A model notice might read: "In order to prevent the use of the
U.S. banking system in terrorist and other illegal activity, federal
regulations require all financial institutions to obtain, verify, and
record identification from all persons opening new accounts or being
added as signatories to existing accounts. This institution cannot waive
these requirements. - U.S. Treasury"
We thank you for the opportunity to comment on the proposed US
Patriot Act.
Respectfully Submitted,
Union Bank & Trust Company
Customer Identification Program Task Force |
